In June 2000, the Department of Education and Training announced that the school would close because of falling enrolments. Following the announcement, local residents formed a committee to prevent the closure, and later to prevent a Government sale of the school site and make the site available for the community, known as the Retain Beacon Hill High School Committee.
The closure of the school was criticised by the Greens New South Wales Education spokesman, John Kaye, who said in a media release:
The demolition of Beacon Hill High School is a monument to poor planning, developer-driven government decisions and a deceitful and inadequate closure process. The closure and demolition of the school is a textbook case of short term thinking. This will leave the local community struggling for public education options within the next seven years.[2]
The school site was sold by the state government in 2007 for a price in the vicinity of $8,750,000. The site was granted development approval by the Minister for Planning, and the school buildings were demolished in January 2007 to make way for a 26 allotment residential subdivision.